Profitability ratio
Profitability ratio is those ratios—gross profit rate, return on sales, return on total assets, and return on common stockholders' equity—which measure a company's ability to earn a profit.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Profitability ratios. Those ratios—gross profit rate, return on sales, return on total assets, and return on common stockholders' equity—which measure a company's ability to earn a profit.
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Profitability ratios. Ratios that show the combined effects of liquidity, asset management, and debt on operations.
Related concepts
- Accounting (alternatively known as accountancy) is management of financial data, information, and knowledge about financial transactions of legal entities. Accountancy tends to include bookkeeping and, depending on a particilar enterprise, may also include quatitative analysis of financial data in the bookkeeping system and/or business intelligence.
